Enagic Co Ltd v Horizons (Asia) Pty Ltd (No 3)  FCA 1512 (2 December 2021)
Successful appeal by Enagic from a decision by the Registrar of Trade Marks, resulting in refusal of the KANGEN trade mark application filed by Horizons on 24 September 2016 for a broad range of services in class 35 including sales, advertising, marketing and business services in class 35.
Enagic relied on use and registration of its KANGEN and KANGEN WATER marks in connection with water filtration and electrolytic equipment used in the production of alkaline water. The evidence disclosed Australian use in relation to these goods commenced in 2008. Enagic has, since 2009, also provided services to promote its direct marketing sales model and assist its agents/distributors in the conduct of their businesses.
Horizons also had an earlier trademark registration for KANGEN in classes 11 and 32 with apparatus for water filtration being excluded from the class 11 goods and had used this mark in Australia since July 2012 for water products. The evidence did not disclose any use of the KANGEN mark for any class 35 services prior to the filing date of its trade mark application.
Enagic was initially unsuccessful in its opposition. It relied on grounds of opposition under ss 42(b), 44, 58, 60 and 62, but could not establish any ground.
Charlesworth J upheld the grounds of opposition under ss 44, 58 and 62A.
Under s44, Enagic relied on its prior trademark registration for KANGEN WATER covering electrolytic water generators for electrically decomposing tap water to generate electrolytic water and for removing chlorine odour from tap water.
Her Honour agreed with the delegate that the applied for KANGEN mark is deceptively similar to KANGEN WATER. However, unlike the delegate, her Honour considered the applied for services were closely related to the class 11 goods covered by Enagic’s KANGEN WATER registration. The class 35 services were drafted very broadly including an unqualified claim to distribution of goods which could notionally include distribution of electrolytic water generators. Charlesworth J was not prepared to exercise discretion and carve out closely related goods, particularly as the appeal was allowed on multiple grounds.
On the pleadings, Horizons was precluded from relying on honest concurrent use or other circumstances under s44(3).
The s58 ownership ground was also established.
Enagic sells its products through a direct selling model where its agents/distributors act as independent contractors and receive commissions. Although her Honour noted that Enagic’s submissions at times wrongly sought to equate the sale and associated delivery of goods with the provision of distribution services, the evidence also disclosed that Enagic has, since 2009, also provided services under its KANGEN mark to promote its direct marketing sales model and assist its agents/distributors in the conduct of their businesses. These services provided to others were the same, or the same kind of thing, as various services covered by Horizons’ trade mark application.
Her Honour also upheld the s62A bad faith ground of opposition.
Enagic contended that Horizons applied to register the KANGEN mark for the purpose of blocking Enagic’s use of it in connection with the Class 35 Services and that its conduct in that regard forms part of a pattern of conduct spanning some years before and after the priority date. Enagic also contended Horizons never intended to use the mark in connection with the Class 35 Services.
There was also evidence that the specification of services filed by Horizons was copied from a specification of an earlier registration owned by Enagic. This supported an inference that registration was sought with Enagic’s trading activities in mind and that the real purpose is related to the illegitimate disruption of Enagic’s business.
The evidence also disclosed that Horizons sought and obtained registration of the word ENAGIC in relation to goods in classes 9 and 11 and services in class 32. Her Honour noted that, like the word KANGEN, ENAGIC is not a word in ordinary English usage. The circumstance that Horizons sought registration of both marks KANGEN and ENAGIC on the same day in 2009 rendered it inconceivable that the word KANGEN was coined by Horizons. These earlier registrations were a strong indicator that Horizons previously sought to exploit an association it perceived to exist between the two words specifically in relation to drinking water purportedly having special qualities.
Her Honour concluded that Horizons sought registration of the KANGEN mark as part of an ongoing strategy to either exploit a connection between the words KANGEN and ENAGIC in the minds of consumers or to disrupt Enagic’s commercial activities. Horizons had no intention to develop its business into the broad field of services in the copied specification at all.
There was evidence of other dubious conduct by Horizons including registration of various domain names and business names.
Her Honour was satisfied that the evidence as a whole supported an inference that Horizons’ trade mark application was made in bad faith.
Charlesworth J rejected the s60 ground of opposition based on the Australian reputation of Enagic’s KANGEN mark as at the 24 September 2016 filing date. Her Honour considered the evidence relied upon by Enagic failed to establish the requisite reputation.
Given this finding as to insufficient reputation under s60, the ground of opposition under the s42(b) contrary to law ground, based on contravention of the Australian Consumer Law, also failed.
© 2021 Selfmark Trademark Lawyers Sydney